Online Gaming Companies Face Rs 55,000 Crore Tax Demand From DGGI

Online Gaming Companies Face Rs 55,000 Crore Tax Demand From DGGI

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The Directorate General of GST Intelligence (DGGI) has reportedly issued pre-show cause notices to several online real money gaming companies, including prominent platforms like Dream11, over alleged goods and services tax dues amounting to approximately Rs 55,000 crore. This development has stirred significant discussions and concerns within the industry, potentially impacting the future landscape of online gaming in India.

The DGGI has sent out notices to online gaming companies, with Dream11 receiving possibly the largest indirect tax notice in the country, amounting to over Rs 25,000 crore. Other companies like Play Games24x7 and its affiliates, including RummyCircle and My11Circle, have also received substantial notices. The total GST demand by DGGI from these companies is expected to reach around Rs 1 lakh crore, creating a wave of uncertainty in the sector.

Dream11 has promptly moved to the Bombay High Court against the pre-show cause notice. The companies now have a limited timeframe of five to seven days to respond to these notices. The responses will be meticulously reviewed before finalizing the GST demands. This swift legal action underscores the gravity of the situation and the potential ramifications on the companies involved.

The DGGI’s Mumbai unit has been rigorously investigating real money gaming apps for over a year, issuing notices during the course of their probe. The companies have contested the GST levied, making representations before the authorities. However, the recent GST notification fixing the GST at 28% on the full face value of bets placed on online games has intensified the scrutiny and led to the issuance of these notices.

The substantial tax demands and the ensuing legal battles are likely to shape the future of the online gaming industry in India. The industry, already navigating through regulatory challenges and public perception, now faces additional hurdles. The outcome of these developments could influence investor sentiments, operational dynamics, and the overall growth trajectory of the sector.

The unprecedented tax notices served to online gaming companies by the DGGI mark a critical juncture for the industry in India. The legal and financial implications of these notices will be closely watched by stakeholders, regulators, and the market at large. The resolution of these matters will play a pivotal role in determining the sustainability and evolution of the online gaming sector in the country.

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